Gold price posts biggest one day rise since October as analysts predict buoyant 2012

The price of gold soared 2.5 per cent yesterday, its biggest one-day gain since late October.

It enabled the asset to claw back all of its losses from last week, reaching $1609 an ounce overnight.

The price pulled back this morning before rising again to hit $1613, a sharp increase on its recent low of $1523.

Rising price: Gold bars ingots in the vaults of the Bank of England

Much of the rise was put down to increased tensions in the Middle East and the stand-off between Iran and the U.S.

Gold is usually a safe-haven in troubled financial times but the
asset's price, which has soared during the crisis of the past few years,
tailed off in the second half of 2011 despite a worsening in the
eurozone debt crisis.

'Gold may not be a safe haven in financial turmoil, but it does seem
to function as a safe haven against real-world geopolitical risks,' Nick
Trevethan, senior sommodity strategist at ANZ, told Reuters.

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Other chartists speculated that gold's recent price patten could suggest a further rise, although the accuracy of such technical analysis is disputed.

Zak Mir of Zaks-TA.com said: 'The past week has now witnessed two great technical analysis events which could be much appreciated in 2012. The first is the bear trap to end 2011 as Gold sank to $1,522 - $10 below the September $1,532 low. The sharp snapback towards $1,600 since then is a significant buy signal, one that could easily return this market back to the $1,900 plus all time record.'

Gold price views from elsewhere

At the weekend, Jack Farchy, commodities reporter for the Financial Times, made his forecast for gold in 2012, suggesting the price would hit fresh highs.

He said: 'It will take some time for gold to regain its reputation with investors after a violent fall in the final months of 2011. But ultimately that will be restored, if only because they have few alternatives while the crisis continues. Investors need no reminding of the risks elsewhere while US and European politicians dither over economic growth measures and their ballooning sovereign debts.

'Most importantly, Asian and Middle Eastern investors – from central banks to sovereign wealth funds – will continue buying lots of gold. Though there may be drops along the way, the gold price in 2012 will surpass 2011’s peak of $1,920 an ounce, rising above $2,000 for the first time in history.'

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Gold price posts biggest one day rise since October with predictions of new highs in 2012